📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    âš¡ Azaadi sale - Celebrate Independence Day with Flat 55% Off On all courses! 13 to 17 Aug âš¡ Enroll Now

    Question

    A profit-maximizing monopolist sets an output of 100

    per day and a price of £10. Which of the following statements is true?
    A The firm's SMC and MR curves intersect at an output of 100, and the point on its demand curve at this output is at £10 Correct Answer Incorrect Answer
    B The firm's SMC and MR curves intersect at an output of 100, and the point on its MR curve at this output is at £10. Correct Answer Incorrect Answer
    C The firm's SMC and AR curves intersect at an output of 100, and the point on its MR curve at this output is at £10. Correct Answer Incorrect Answer
    D The firm's SMC and AR curves intersect at an output of 100, and the point on its AR curve at this output is at £10. Correct Answer Incorrect Answer
    E All of the above Correct Answer Incorrect Answer

    Solution

    Statement a is true. The intersection of SMC and MR is always best, unless it results in a loss that exceeds the firm's total fixed costs, in which case it is better to shut down and produce nothing. To find the price a price-setter must set, we always look at the point on its demand curve at the output it wishes to sell.

    Practice Next
    More Research Questions
    ask-question

    Not sure which exam is best for you Talk to our expert

    Get My Free Call